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harina [27]
2 years ago
13

g Bob is a wheat farmer, but also likes to give fiddle lessons. One spring day, Bob faces a choice: spend ten hours planting whe

at or spend ten hours giving fiddling lessons. Suppose Farmer Bob charges $35 per hour for his fiddle lessons. Suppose further that, in ten hours, Bob can plant $280 worth of seeds that he expects will yield $600 worth of wheat. (Assume there are no other costs involved with either activity.) After breakfast, Bob decided to spend the day planting. What is the implicit cost Farmer Bob incurred from his ten hours of planting seeds
Business
1 answer:
enot [183]2 years ago
8 0

Answer:

The implicit cost that Farmer Bob incurred from his ten hours of planting seeds is:

= $350

Explanation:

a) Data and Calculations:

Hours spent planting wheat = 10 hours

Hours spent giving fiddling lessons = 10 hours

Charge per hour of fiddle lessons = $35

Total charges of giving fiddling lessons for 10 hours = $350 ($35 * 10)

Cost per hour of planting seeds = $280

Total cost incurred on planting seeds = $2,800 ($280 * 10)

Revenue expected from planting seeds = $6,000 ($600 * 10)

Profit from planting seeds = $3,200 ($6,000 - $2,800)

The implicit cost that Farmer Bob incurred from his ten hours of planting seeds = $350

b) The implicit cost that Bob incurred refers to the opportunity cost of planting seeds, which is the revenue that he could have earned by giving fiddle lessons.  While he incurred a total of $2,800 in planting seeds, which is the explicit cost, Bob also incurred a lost or opportunity cost of $280 because of the forgone alternative.  Therefore, in calculating his economic profit in planting seeds, the $280 opportunity cost will be factored in.

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3 years ago
Omega Custom Cabinets produces and sells custom bathroom vanities. Assume that labor is the only input that varies for the firm.
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Answer:

The answer is option a). For the 11th worker, the marginal profit is $600.

Explanation:

<em>Step 1: Determine the initial profit for the 10 workers as shown;</em>

initial profit=revenue from sales-cost of labor

where;

revenue from sales=sale per unit×number of units

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cost of labor=cost per unit×number of workers

cost of labor=1,000×10=$10,000

replacing;

initial profit=16,000-10,000=$6,000

<em>Step 2: Determine the final profit for the 10 workers as shown;</em>

final profit=revenue from sales-cost of labor

where;

revenue from sales=sale per unit×number of units

revenue from sales=800×22=$17,600

cost of labor=cost per unit×number of workers

cost of labor=1,000×11=$11,000

replacing;

final profit=17,600-11,000=$6,600

<em>Step 3: Determine the marginal profit as shown;</em>

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initial profit=$6,000

replacing;

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Explanation:

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